India Okays Purchase Of $3.2B Stake In Russian Oil Fields

India’s government approved on Wednesday two stake purchases by a consortium of Indian companies of Russian oil fields worth a combined US$3.2 billion.

The Indian cabinet gave the green light to the consortium comprised of Oil India Limited (OIL), Indian Oil Corporation Limited (IOCL), and Bharat Petro Resources Limited (BPRL) to buy 23.9 percent in JSC Vankorneft and 29.9 percent in LLC Taas-Yuryakh, the companies running the Vankor and Taas-Yuryakh fields, respectively.

The Indian companies will be paying US$2 billion for the Vankorneft stake and another US$1.2 billion for the Taas-Yuryakh shares.

The acquisitions will boost India’s oil supplies, which is in line with its goal of adding high-quality international assets to its Exploration & Production (E&P) portfolio in order to increase its energy security, the government said in its statement.

In March of this year, Rosneft had signed a legally binding share sale agreement with the Indian companies for the Taas-Yuryakh oil field. A few months later, in June, the Russian company entered into an agreement with the three Indian firms for the Vankor field development.

Just a month before that, Indian state oil company ONGC had agreed in May to buy 15 percent in Vankor. ONGC has since raised US$1 billion in proceeds from two bond issues, which will be used to refinance a loan, taken out to fund the acquisition of the Vankor stake.

According to Rosneft estimates, the recoverable resources of the Vankor field as of January 1, 2016, stood at 361 million tons of oil and condensate and 138 bcm of gas. The Vankor field produced 22 million tons of oil and 8.71 bcm of gas last year.

While Indian oil companies are buying into Rosneft’s Russian fields, Rosneft itself has been seeking the acquisition of 49 percent in India’s Essar Oil, but the deal is not yet sealed, and it is said that it may face U.S. scrutiny over the western sanctions against some Russian companies.